Recessions or economic downturns are just like death and taxes – they’re inevitable. They may not happen soon, but they will happen eventually. Smart entrepreneurs won’t just be aware of this – they’ll prepare for it. Here are 5 ways they should do so:

1. They Must Treat Their Networks with the Same Value They Hold Capital

Capital makes businesses possible, and is an important resource in case of an economic recession. It is reliable and can keep the lights on when the market inevitably turns. Having a stockpile of emergency cash not only keeps the business running, it also keeps everyone in the company functioning on a stable frame of mind. It’s hard to get work done when everyone’s worried about whether or not they’ll get paid.

However, it’s far from the only thing that matters. An entrepreneur’s relationships can also provide immense value and much-needed help when things aren’t going well. They must ensure that not only do they have a strong network to lean on, entrepreneurs must also make sure that those present in the network are reliable and supportive of the startup.

2. They Should Invest in Recession-Proof Assets

Economics are examples of peaks and valleys. At times, there are times of great fortune and success. Other times can lead entire countries to ruin. Those flows are inevitable, and smart entrepreneurs will ensure that they’re as insulated against recessions as possible.

Entrepreneurs should take a look at investing in assets that are recession proof. This means that they don’t lose value when the market turns. If possible, they should look for ones that actually do better when the economy is unhelpful. Doing that assures a state of equity – when other assets stumble, they make up for it.

These assets don’t have to be related to the startup’s industry. In fact, to get assets that work well in recessions often means branching into entirely unrelated industries. While this seems counterintuitive, in action it merely provides entrepreneurs with a safety net that can help power a startup during a crisis.

3. They Won’t Bet on One Horse

No startup is guaranteed to succeed. Even in the best of times, many will fail before they finish their first year. That’s just how business goes. The good news is, nothing is stopping them from getting more baskets for their eggs.

Entrepreneurs won’t put all their hopes and dreams on one startup if they can help it. They will vary and diversify their revenue streams to make sure that one recession doesn’t spell doom for their dreams of financial independence. That means looking for other investments and sometimes, founding and running multiple startups at the same time.

4. They Must Be Poised to Strike

With economic downturns and depressions come opportunity. It might seem cutthroat, but that’s the kind of behavior an entrepreneur must engage in if they want to succeed. The fact that when things fail, opportunities come to light.

Smart entrepreneurs won’t just be focused on surviving a recession – they’ll aim to thrive. When housing bubbles burst, they’re there to snap up now cheap houses from entities who are desperate to sell. When things settle down and property values increase, these same entrepreneurs are poised to make a killing, which will provide capital that can fuel the startup and other endeavors.

5. They Must Know When to Quit

Endurance and persistence are traits key to succeeding as an entrepreneur. However, those same traits can push those same businessmen into unfavorable positions. Knowing when to quit is just as valuable as knowing when to push.

Some recessions allow for startups, fragile as they are, to push through and survive. They endure the challenge, biding their time until the marketing stabilizes. However, that’s not always the case. Sometimes, it’s a lost cause and it’s better to shutter the office and move on to the next venture. Smart entrepreneurs will measure their options carefully and won’t be afraid to quit if fighting on is no longer viable.

Recessions may be inevitable, but they’re far from insurmountable. All an entrepreneur needs to do is to prepare for them accordingly.

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After graduating from the University of Calgary with a Bachelor of Science degree in Computer Science, Gerald joined KPMG (Formerly Thorne Riddell) as a Computer Accounting Customer Service representative. In this position, Gerald installed accounting systems in over 200 different small to medium sized companies over a 6 year span. In 1989, Gerald left KPMG to continue to work with small business clients in his own corporation installing computer accounting systems. While in this role, he was engaged by the DeVry Institute of Technology in Calgary to teach various courses. In time, Gerald moved up through the ranks of DeVry until he attained the position of Director of Finance for the Calgary Campus. He also acquired his Masters of Business Administration from City University of Seattle, Washington in 2001. Gerald’s career has always been focused on small business, accounting and education.

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